Good Evening, it's Paul here.

Sorry my report is late today.


Provident Financial (LON:PFG)

Share price: 589.5p (down 66.2% today)
No. shares: 148.2m
Market cap: £873.6m

Trading statement - this is such an interesting announcement that I feel obliged to mention it. This company is a UK sub-prime consumer lender. Its divisions include Vanquis Bank, the Consumer Credit Division (comprising Provident and Satsuma), and Moneybarn.

Looking back to its 2016 results, the group made an adjusted profit of £334.1m, and paid 134.6p in dividends to shareholders. The share price was riding high, at about 3000p in late 2016. Compare that with today, at just 589.5p - that's a share price fall of about 80% this year.

Its interesting how, when a share really collapses, there are often clear warning signs in previous announcements. That seems the case here. The most recent interim results were poor. They also contained worrying comments about several FCA reviews affecting the company. Also, disruption was reported from a change in the business model at the CCD - moving from self-employed, to employed operational staff. This was supposed to be a compelling change in business model.

EDIT - a couple of brokers have flagged up that competitors are saying that large numbers of the best sales agents are jumping ship from PFG, to join competitors such as Morses, and NSF. This sounds ominous to me, and could mean that profits may not necessarily recover at PFG.

Today's announcement has to be one of the worst profit warnings I've seen. The wheels seem to have completely come off at the CCD. This bit from today's announcement sounds awful;

The rate of progress being made is too weak and the business is now falling a long way short of achieving these objectives. Collections performance and sales are both showing substantial underperformance against the comparable period in 2016.

The routing and scheduling software deployed to direct the daily activities of CEMs has presented some early issues, primarily relating to the integrity of data, and the prescriptive nature of the new operating model has not allowed sufficient local autonomy to prioritise resource allocation during this period of recovery.


Things don't get a lot worse than that. It sounds as if the new business model has been an unmitigated disaster. Unsurprisingly, the CEO has now gone.

As…

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